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Corporate Social Responsibility
News
3.28.2006 ET
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New Reports Offer Investors Guidance for Assessing Environmental, Social, and Governance Factors in Asian Businesses
(CSRwire) Hong Kong/Washington, D.C.--The Association of Sustainable and
Responsible Investment in Asia (ASrIA) released today a series of reports
offering investors guidance on adding critical new areas for value
creation and risk into analysis of Asian businesses across eight sectors.
The reports, funded by the International Finance Corporation, the private
sector arm of the World Bank Group, focus on the following sectors:
automobiles; banking; metals and mining; oil, gas, and petrochemicals;
power; pulp, paper, and timber; supply chain; and technology. They
highlight key themes for sustainability investments in Asia, as well as
current disclosure norms and opportunities for global investors.
"Over the past decade, global and Asian investors have become more aware
of the impact of environmental, social, and governance variables on their
investments," said Melissa Brown, ASrIA's Executive Director. "Whether it
is a question of watching companies struggle with persistent environmental
challenges or evaluating the impact of labor disputes, investors in Asian
equities must increasingly look at a range of global sustainability issues
to assess the long-term value of companies."
"Investors need a framework for assessing the growing and complex
environmental, social, and governance issues that face companies in Asia
today. This report begins the process of creating such a framework," said
IFC's Director of Environmental and Social Development, Rachel Kyte.
"ASrIA is uniquely placed to develop this report in Asia, and these
studies are the latest example of our cooperation with ASrIA and of the
innovation in sustainable financial markets that we seek to spur."
The reports were launched in the United States at the Spring Meeting of
the Social Investment Forum's International Working Group in Washington,
D.C.
Taking Stock--Key Themes
Taking Stock represents a first step toward filling a very large
analytical gap in the Asian investment literature. This gap is striking
given that Asia is the fastest growing source of sustainability risks
globally, due to its rapid growth in economic activity and in associated
environmental, social, and governance (ESG) impacts. Indeed, developed
market companies increasingly frame their discussion of these risks in
terms of their activity in Asia. Despite the growing pressure to evaluate
ESG issues in developed markets, Asian investors have had comparatively
few benchmarks for rating performance because of more subdued enforcement
of regulatory standards and less participation from minority shareholders.
The reports highlight three important key, cross-cutting risks affecting
the Asian equity investment outlook generally:
Focused analysis of ESG risks is hampered by limited disclosure
Government ownership and control of many large listed Asian companies
is a critically important variable in ESG performance
Globalization and market development are amplifying ESG trends linked
to China and India
The reports present country, company, and market information as well as
case studies that support the following investment themes:
Environmental issues appear to dominate the Asian investment picture,
but medium-term incentives for change are emerging on a case-by-case basis,
not systematically
Better governance standards are a key facilitator for improving ESG
performance
Rising public expectations are a growing force for regulatory
change
Taken together, the sector reports raise important questions about how to
shape investment strategies, reflecting the range of risks and
opportunities that sustainability analysis of Asian equities can
highlight. This is particularly relevant for large cap investors versus
those who favor innovative, small companies. It is also relevant for
investors with strong country allocation disciplines.
Taking Stock is available for free download from www.asria.org/publications.
In addition to the full report, it is possible to download an introduction
to the issues, a summary document, and individual sector reports.
The Association for Sustainable & Responsible Investment in Asia (ASrIA),
is a not-for-profit membership association that has taken a leadership
role in promoting sustainable investment in Asia since its founding in
2001. Visit the ASrIA website at www.asria.org.
The International Financial Corporation is the private sector arm of the
World Bank Group. Its mission is to promote sustainable private sector
investment in developing and transition countries, helping to reduce
poverty and improve people's lives. IFC's technical assistance program in
sustainable financial markets is supported by Italy, Luxembourg, the
Netherlands, Norway, and Switzerland. See the IFC website at www.ifc.org/ifcext/enviro.nsf/Content/SFMF.
The Social Investment Forum is a nonprofit membership organization
promoting the concept, practice, and growth of socially responsible
investing. Visit the SFI website at www.socialinvest.org
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